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Mr. McNulty: With your indulgence, Mr. Griffiths, I shall follow the lead of the right hon. Member for East Yorkshire (Mr. Knight) and conflate the two debates on clause 4 and schedule 4, as one implements the other.
The shame about many of the right hon. Gentleman's eloquent rhetorical flourishes is that I do not recognise the schedule that he was talking about. I have said repeatedly that the Bill is not about negating existing contracts or retrospectively tearing up contractual and financial obligations between various parties. If the world in terms of schedule 4 was as he characterised it, with the unilateral tearing up of contracts and the consequent impact on private investors, I would be a tad fearful if I were a private investor—but it is not as he characterised it.
It cannot be a right starting point for public policy that the office charged with the economic regulation of the railways sets their cost to the public purse. As the right hon. Gentleman said, the Office of the Rail Regulator determined last December that, regardless of Government priorities across the fiscal and budgetary piece and of what they determined in a Queen's Speech or Budget, or in any other fashion, £x billion had to be spent on the railways. I defy any Government to work on that basis across any aspect of public policy. So that is where we start from.
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Mr. Christopher Chope (Christchurch) (Con): Would the Minister accept that that is not what the Office of Rail Regulation says? It says that it consulted with the Government and that the Government had every opportunity to change the amount that would be available or the obligations that would be placed on the railways to deliver outputs.
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Mr. McNulty: I simply would not. I accept half of that. Of course it consulted and there was extensive debate, but under current statute law, the second half of what the hon. Gentleman suggests is wrong. The absolute bottom line under the prevailing circumstances before we made changes is that there is no subsequent recourse of appeal of any description for the Government of the day when the rail regulator determines the final bill. The last stop is with the ORR. For such a significant chunk of public finance, in such a significant and important area of public policy, that simply cannot be right.
The Office of Rail Regulation is charged with economic regulation, and does it extremely well. It puts that in the balance of public and private mix, and that is entirely right. I repeat what my right hon. Friend the Secretary of State said in February:
''There is no question of weakening . . . economic regulation . . . There will be no diminution in the regulatory protection of the private sector investors in the railway.''—[Official Report, House of Commons, 9 February 2004; Vol. 417, c. 1237W.]
There is, and will remain, more than £70 million per week being invested by the private sector. The Association of Train Operating Companies, the principal voice of the private sector in the train operating part of the railways, welcomes the White Paper and the Bill.
All that schedule 4 does is to amend schedule 4A of the 1993 Act, which provides a process by which the conclusions of an access charge as agreed by the ORR are taken forward. In carrying out such a review, which is clearly laid out in schedule 4, the ORR seeks to establish the level of access charges needed by those providing the railway infrastructure, such as Network Rail. Schedule 4 also establishes, as I have said, the formal process for the prior stage of conducting a review. That includes, in particular, how the Secretary of State and the Scottish Ministers make inputs at various stages of the review. It is not a world as described by the right hon. Member for East Yorkshire (Mr. Knight). It is not about tearing up, in such a cavalier fashion as he described, existing contracts, but it is a key element of where we want to get to in terms of the new vision for railways in this country.
Clearly the focus of much coverage has been on the SRA, but our vision was always about a recalibration of all the key actors involved in the railways industry once the SRA was no longer one of those players. It was not simply—I know that it has been characterised in this way—to take the SRA out of the equation. We would be left with exactly the same arrangements with the Department for Transport: the Government would do the SRA bits and the relationships between Network Rail, the TOCs and the ORR would all be the same as before. There are fundamental changes and a recalibration of the relationship between each of the remaining players left in the rail industry. As the right hon. Gentleman rightly notes, that is an important shift in the definition of the relationship between ORR and Government. He is absolutely right about that point, but not about the subsequent doom and gloom that follows.
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As we shall come on to see—not in this Bill, but in the broader context—Network Rail's role changes in the new world, for want of a better phrase. How it relates to the TOCs, the ORR and back to Government, equally, will change. All those elements in terms of the recasting of relationships in rail are very important.
It is worth spending a few moments considering the underlying philosophy of schedule 4, and why its provisions do not undermine the independence of economic regulation or Network Rail's private sector status. The Government are clear that a private company is best placed to provide the operational and management leadership for the rail industry. At the start of a charges review, the Government can articulate the outcomes that they seek and the funding that is available; but it is for the regulator, and him alone, to determine, on the basis of those views, what outputs it is reasonable for Network Rail to deliver and what funding it will need.
The challenges are ones of delivery. A private company is well placed to blend the necessary management, commercial, technical and operational expertise and competencies necessary to meet those challenges. We have always said that civil servants and Ministers are not well placed to deal with the substance or details of such work and should not—we will not—get involved.
The regulator will ensure that Network Rail has the responsibility and freedom to deliver. However, being a private company does not make Network Rail unaccountable—or accountable only to shareholders, as was Railtrack. Network Rail is accountable to the regulator under its licence. It is accountable also to its members, which include passenger representatives, train companies and others involved in delivering rail services. That means that Network Rail works in the interests of all those who have a stake in using or delivering rail services.
That results in a strong and robust structure for delivering rail services, with each party doing what it does best—the Government developing the overarching strategy; Network Rail working in the environment of independent regulation for delivering services for rail users; and the Office of Rail Regulation discharging its duty of independent economic regulation.
In that context, I say as strongly as I can that the fears outlined by the right hon. Gentleman are, in this case, misplaced. It is a recalibration of the relationships, but it is absolutely not a challenge to existing contracts with the private sector. It is not a question of weakening the independence of economic regulation, and there will be no diminution in the regulatory protection of the private sector.
Somewhere in my speech, I have probably moved schedule 4, spoken against the right hon. Gentleman, and spoken pre-emptively against amendments Nos. 50 and 51.
Dr. Pugh: On a point of order, Mr. Griffiths. I was going to speak on schedule 4.
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The Chairman: We are having a stand-part debate on clause 4, which leads us on to schedule 4. I have therefore allowed a wider debate on the clause.
Mr. Chope: What the Minister said will not wash. It is not only the fears outlined succinctly and appositely by my right hon. Friend the Member for East Yorkshire that are of concern. Fears have also been expressed by the Office of Rail Regulation itself. The Minister talks about recalibration—another example of Labour newspeak.
Mr. McNulty: Rather than throwing out an accusation, the hon. Gentleman should provide the Committee with substantive evidence that the Office of Rail Regulation has challenged the provisions of clause 4 and schedule 4—in writing.
Mr. Chope: I will do exactly as I am told. The Minister leads me to the ORR's response to the Select Committee on 4 July 2004. In paragraphs 17 and 18 of its response, the ORR said:
''For the reasons given below, the Government already has all the power it needs in relation to the future financing of the railway. It only requires the will to use it . . . If there is any change to the jurisdiction of the ORR in this respect, it will have to be brought about by legislation. Such a step would be a clear breach of the formal assurances which the Secretary of State gave to Parliament and the financial community on 9 February 2004, which is why the Government should not and will not do it.''
The Government are now doing it, in defiance of the assurances given to Parliament.
Mr. McNulty: I clearly asked the hon. Gentleman to provide evidence in writing that the ORR is in conflict or otherwise with clause 4 and schedule 4, but all that he has done thus far is read out a report from July. However pressing the issue is, the ORR cannot, in formulating its view, pre-empt publication of the clause and the schedule by five or six months. Therefore, can the hon. Gentleman, as he suggested in his opening remarks, provide evidence from the ORR that it has objected in writing to the clause and the schedule, or will he freely admit that he inadvertently misled the Committee in suggesting that he had the ORR's view on the provisions? By that, I do not mean the view set out in its report from back in July, but its view of the provisions in the Bill, as published last month.
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